Telemarketing

Telemarketing is the process of using the telephone to generate leads, make sales, or gather marketing information. Telemarketing can be a particularly valuable tool for small businesses, in that it saves time and money as compared to personal selling, but offers many of the same benefits in terms of direct contact with customers. In fact, experts have estimated that closing a sale through telemarketing usually costs less than one-fifth of what it would cost to send a salesperson to make a sale in person. Though telemarketing is more expensive than direct marketing, it tends to be more efficient in closing sales and thus provides a greater yield on the marketing dollar.

Telemarketing is especially useful when the customers for a small business's products or services are located in hard-to-reach places, or when many prospects must be contacted in order to find one interested in making a purchase. Although some small businesses operate exclusively by telephone, telemarketing is most often used as part of an overall marketing program to tie together advertising and personal selling efforts. For example, a company might send introductory information through the mail, then follow-up with a telemarketing call to assess the prospect's interest, and finally send a salesperson to visit.
Telemarketing can be either inbound or outbound in scope and further b2b telemarketing or b2c telemarketing. Inbound telemarketing consists of handling incoming telephone calls—often generated by broadcast advertising, direct marketing, or catalogs—and taking orders for a wide range of products. Representatives working in this type of telemarketing program normally do not need as much sales training as outbound telemarketing agents because the customer already has shown an interest by calling in.

Outbound telemarketing can be aimed directly at the end consumer—for example, a mortgage broker  may call people to generate mortgage leads—or can be part of a b2b telemarketing program. Representatives working on this side of the industry generally require more sales training and product knowledge, as more actual selling is involved than with inbound telemarketing.

Major applications of b2b telemarketing include selling to existing accounts, outbound new account development, inbound order processing and inquiry handling, customer service, and supporting the existing field sales force. As the costs of field sales continue to escalate, businesses are using telemarketing as a way to reduce the cost of selling and give more attention to marginal accounts. Telemarketing campaign can be either handled in-house by a company or outsourced. Operations range in size from a one-person in-house staff member at a small business to a major corporation or service center that may have as many as 1,000 telephone stations. One of the advantages telemarketing has over other direct marketing methods is that it involves human interaction. In fact used correctly and by professionals, the telephone is the most cost-efficient, flexible and statistically accountable medium available. At the same time, the telephone is still very intimate and personal. It is individual to individual. Although telemarketing has been the center of some controversies—ranging from scams run over the phone to a number of legal issues that have been the center of debate at both the state and national levels—the call center industry continues to grow. In fact, the American Telemarketing Association found that spending on telemarketing campaign increased from $1 billion to $60 billion between 1981 and 1991. By the mid-1990s, telemarketing accounted for more than $450 billion in annual sales, a figure that is expected to continue to rise through the foreseeable future.

Although telemarketing can be used as a stand-alone operation, it often works best as part of an overall marketing campaign. Companies considering the use of telemarketing have to look at such factors as: which products and services are candidates to be sold by phone; whether telemarketing can be used to increase volume through upgrading the sale; how the process can help qualify prospects, define the market, and service existing accounts; and whether telemarketing can help generate new business. Some of the roles telemarketing can be used to fulfill include: selling, generating leads, mortgage lead generation, gathering information, and improving customer service.  Telemarketing campaign can either supplement or replace direct marketing to existing accounts.

It can complement the field sales effort by reaching new customer bases or geographic markets at relatively low cost. It can also be used to sell goods and services independently, with no direct marketing in place. This method often is used for repetitive supply purchases or readily identifiable products, though it can be effectively applied to other products & services as well. The inside sales force can be used to replace direct marketing for marginally profitable customers. A general rule of thumb in business says that 20 percent of customers account for 80 percent of sales, so conversely the remaining 80 percent of customers generate just 20 percent of sales. But businesses must keep in mind that marginal does not necessarily mean unprofitable. And the existing customer base is perhaps the most important asset in any business; sales increases most often come from current accounts, and it generally is less costly to maintain current customers than to search out new business. Telemarketing agents can give these reliable customers the attention they deserve. The agents can phone as often as needed, determine the customers' purchasing cycles, and contact them at appropriate reorder times.